Additional Information Regarding the Industrial Alliance between Oi and
Portugal Telecom
PR Newswire
RIO DE JANEIRO, Oct. 25, 2013
RIO DE JANEIRO, Oct. 25, 2013 /PRNewswire/ --Oi S.A. ("Oi"), in compliance
with requests made by the Brazilian Securities Commission, hereby reiterates
and clarifies to its shareholders and to the market certain information
related to the transactions provided in the Memorandum of Understanding for
the merger of the activities of Oi and Portugal Telecom SGPS S.A. ("Portugal
Telecom") (the "Transactions"), announced in the Fato Relevante dated October
2, 2013.
As described in the Fato Relevante, Telemar Participacoes S.A. ("TmarPart")
and holding companies that hold shares of TmarPart, AG Telecom Participacoes
S.A. ("AG") and LF Tel S.A. ("LF"), will be capitalized with the resources
needed to fully repay their indebtedness, in a manner such that, other that
the shares of Oi, the net assets represented by the other assets and
liabilities of these companies corresponds to zero or slightly more than zero.
The increase in the capital of AG and LF, to be contributed directly or
indirectly by Portugal Telecom, will be approximately R$2.25 billion. AG and
LF, in turn, will contribute approximately R$3.1 billion to the capital of
TmarPart, in the proportion of 50.0% each.
These capital increases will be made through the subscription by Portugal
Telecom of debentures convertible into shares of AG and LF, followed by the
subscription by AG and LF of debentures convertible into shares of TmarPart,
providing the funds necessary to settle the debt of each of these companies,
which amounts to an aggregate of approximately R$4.5 billion, consisting of
R$650 million of debt of each of AG and LF, and approximately R$3.1 billion of
debt of TmarPart.
After these capital increases, the corporate structure of these companies will
be simplified through corporate reorganization transactions. Any goodwill
registered by these companies as a result of these transactions will not be
considered for the purposes of determining the exchange ratio applicable to
the mergers (including goodwill registered by TmarPart with respect to the
acquisition of Brasil Telecom S.A.), given that, as previously disclosed, the
exchange ratios for these mergers were based on the Oi shares held directly or
indirectly by the companies involved in the Transactions (assuming that they
will be capitalized with the resources (cash or very liquid assets) needed to
settle their indebtedness in full).
As a result, the goodwill registered in the companies whose corporate
structure will be simplified (including Bratel Brasil S.A.), which includes
not only the goodwill related to the acquisition of Brasil Telecom S.A.
mentioned above, but also other goodwill created by the controlling
shareholders of Oi that may be transferred to Oi for the benefit of all of
Oi's shareholders, will not result in any dilution to the non-controlling
shareholders of these companies. The controlling shareholders of Oi will not
use the right provided in article 7 of CVM Instruction No. 319/99, therefore
the goodwill will be used to benefit all the shareholders. When applicable,
the companies involved in the Transactions will comply with article 6 of CVM
Instruction No. 319/99.
Finally, Oi filed, via CVM's IPE System, on this date, a copy of the
Memorandum of Understanding dated October 1, 2013 in relation to the
Transactions. It is important to note that the Memorandum of Understanding is
subject to the satisfaction of conditions, including the negotiation and
execution of definitive agreements and the definition of a final structure for
the conclusion of the action that are part of the Transactions.
OI S.A.
Bayard De Paoli Gontijo
Investor Relations Officer
Additional Information and Where to Find It:
This communication is not an offering document and does not constitute an
offer to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval in any jurisdiction in which distribution
of an offering document or such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of that
jurisdiction.
This communication contains information related to (1) the proposed capital
increase and related public offering of common shares and preferred shares by
Oi, (2) the proposed merger of shares (incorporacao de acoes) between either
TmarPart or another company constituted for this purpose ("Corpco") and Oi,
and (3) the proposed merger (incorporacao) of Portugal Telecom with and into
CorpCo.
Oi may file a registration statement (including a prospectus) with the U.S.
Securities and Exchange Commission (the "SEC") for the offering of its common
shares and preferred shares to be issued in connection with its proposed
capital increase. Before you invest, you should read the prospectus in that
registration statement and other documents Oi has filed with the SEC for more
complete information about Oi and this offering. You may get these documents
for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively,
Oi will arrange to send you the prospectus after filing if you request it by
calling toll-free 1-855-672-2332.
In connection with the proposed merger of shares between CorpCo and Oi and the
proposed merger of Portugal Telecom with and into CorpCo, CorpCo plans to file
with the SEC (1)one or more registration statements on Form F-4, containing a
prospectus or prospectuses which will be mailed to shareholders of Oi and/or
Portugal Telecom, as applicable (other than non-U.S. persons as defined in
applicable rules of the SEC), and (2)other documents regarding this proposed
merger.
We urge investors and security holders to carefully read the relevant
prospectuses and other relevant materials when they become available as they
will contain important information about the proposed capital increase,
proposed merger of shares and proposed merger.
Investors and security holders will be able to obtain the documents filed with
the SEC regarding the proposed mergers, when available, free of charge on the
Commission's website at www.sec.gov or from CorpCo or Oi.
Special Note Regarding Forward-Looking Statements:
This communication contains certain forward-looking statements. Statements
that are not historical facts, including statements about our beliefs and
expectations, business strategies, future synergies and cost savings, future
costs and future liquidity are forward-looking statements. The words "will,"
"may," "should," "could," "anticipates," "intends," "believes," "estimates,"
"expects," "plans," "targets," "goal" and similar expressions, as they relate
to TmarPart, Oi or Portugal Telecom or CorpCo, are intended to identify
forward-looking statements and are subject to a number of risks and
uncertainties. There is no guarantee that the expected events, tendencies or
expected results will actually occur. Such statements reflect the current
views of management of Oi and are subject to a number of risks and
uncertainties. These statements are based on many assumptions and factors,
including general economic and market conditions, industry conditions,
corporate approvals, operational factors and other factors. Any changes in
such assumptions or factors could cause actual results to differ materially
from current expectations. All forward-looking statements attributable to us,
or persons acting on our behalf, are expressly qualified in their entirety by
the cautionary statements set forth in this paragraph. Undue reliance should
not be placed on such statements. Forward-looking statements speak only as of
the date they are made. Except as required under the U.S. federal securities
laws and the rules and regulations of the SEC or of regulatory authorities in
other applicable jurisdictions, we do not have any intention or obligation to
update or to publicly announce the results of any revisions to any of the
forward-looking statements to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting the
forward-looking statements. You are advised, however, to consult any further
disclosures TmarPart, Oi or Portugal Telecom or CorpCo make on related
subjects in reports and communications TmarPart, Oi or Portugal Telecom or
CorpCo file with the SEC.
SOURCE Oi S.A.
Contact: IR, Patricia Frajhof, +55-21-3131-1315, patricia.frajhof@oi.net.br